NEW YORK (FORTUNE Magazine) - True, home prices still are exorbitant by most historical standards. But the market is moving in buyers' favor - here's how to capitalize on that shift.

Many sellers are clinging to bloated pricetags that are based on what homes were fetching at the peak rather than what's realistic today. Case in point: A four-bedroom home in Wellesley, Mass., that debuted on the market last summer for $750,000 now has an asking price of $620,000.

To gauge local conditions, you want to know how many houses are for sale and how long the average house has been sitting on the market today vs. a year ago.

Once you focus on a particular house, get the same report on comparable dwellings that an agent would give a seller. It costs you nothing, and it can save you from placing more money on the table than you should.

Without doing this research "you're just shooting in the dark," says Lyle Martin, co-founder of Assist-2-Sell, a discount realty firm. "The home could be totally overpriced, or it could be a steal."

In the heat of the boom, home shoppers committed to properties within minutes of touring them. Although sellers still have the upper hand in some markets, in most, time is on your side.

You can make good use of it by getting to know your target market intimately. "Now you can do your homework," says Lance Pagel, a Re/Max agent in Roseville, Calif.

Some of the things you can use the extra time to delve into more deeply: the school system; zoning issues that could change the value of homes in the coming years; the job picture; and recent property tax increases, as well as the outlook for more.

Once you're ready to make an offer, again, don't be hasty. Hire a professional to conduct a careful inspection, and follow up by getting estimates for dealing with any problems he uncovers - repairing a leaky roof or replacing an old furnace. All this is part of the cost of carrying a house, and you need to factor it into your budget before you know what you can really afford to pay.

Sellers who won't budge on the asking price may be willing to make other concessions. This is especially true when you're buying from homebuilding companies, which need to keep prices stable to avoid angering recent purchasers.

To move product these days, they're throwing in all sorts of upgrades.

In January the National Association of Home Builders found that 41 percent of builders were offering freebies, up from 32 percent six months earlier.

Near Sacramento, Centex is offering backyard landscaping, window treatments, and free washers and dryers to first-time buyers of 1,700- to 2,800-square-foot homes. A Fairfax, Va., builder of condos is tossing in a prepaid two-year lease on a BMW to buyers of two- or three-bedroom units.

And in San Diego, in a program offered by mortgage lender Cal Pacific, some sellers are promising to make up to a year's worth of mortgage payments to buyers who come close to the full asking price. Still, with plenty of houses to choose from, don't let a gimmicky offer lead you to overpay for a place you're not crazy about.

Plus:

• Tips for sellers and speculators
• Tips if you're staying put

And: 7 real estate 'dead' zones...5 'danger' zones